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Contract Terms Sellers Care About Other Than Price


Contract Terms Sellers Care About Other Than Price

In one of my other recent blogs I promised to do a part two where I told you other terms that can help you win when writing offers on homes. I’m going to talk about the complimentary terms that you can use. 

The other terms that we use also refer to an escalation clause. Escalation clause addresses the price factor but, what else can we write to win? Our goal outside of price is making the seller feel as comfortable as possible with our offer. By comfortable we mean it has the best chance of making it all the way to closing.

Because it can hurt a property’s chances of selling if it has to go back to market because then you can become a little tainted. Other buyers worry that there’s something wrong with it. So we want to do as much as we can to convince the seller that we’re going to make it all the way to closing. We do that by removing the roadblocks that in a less competitive market we would include in an offer. Those roadblocks are also contingencies or I like to refer to them as the windows, through which you can climb out of an offer. Those are your appraisal contingency, your inspection contingency and there are other contingencies, such as Title. But Title is not something I’m comfortable recommending that you remove from your offer.

But there are ways that we can mitigate the risk of an inspection contingency and appraisal contingency and keep the seller happy, while still protecting you a little bit. On inspection you may have heard that some people you know had to remove their inspection contingency all together. What I prefer to do is write a termination only which means we still get an inspection done but it means we’re not going to go back to the seller and renegotiate that price especially, if the price gets bid way, way up. It used to be in less competitive markets that buyers would try to use their inspection repair requests to get that price back down by writing “only on termination”. It says, hey, we’re still going to check out the house and make sure it’s not a lemon but, we’re not going to ask you for any repairs.

Our option is either take it or leave it. So we’ve sort of found a compromise with the seller on which you get to have an inspection but we’re not going to try to beat them up on price and the inspection has to come up bad enough that you’re like no, no, we don’t want it anymore. But if that happens, you do get to get out of the contract and then on the appraisal, you can waive the appraisal . If you have the cash to make up how much it might come under or we can write an appraisal gap where we say, hey, I will pay $10,000, $20,000 over the appraisal amount. So you’re saying this is how much extra cash I’m willing to put in over the appraisal, but you don’t end up having to pay an infinite amount more over the appraised value to come up to the original offer price kind of like that appraisal gap.

One thing I didn’t mention on the inspection is that sometimes we’ll even write an inspection gap that says on top of, Hey, I’m not going to ask you for repairs. I’m only going to walk away If it’s bad enough that I no longer want the house. We’ll even say, Hey, I can’t stop unless the total cost of repairs in that inspection are $10,000, $20,000, $50,000. Depending on the price point of the home and your comfort level with doing repairs. We say, not only will I not terminate, I have to prove to you that there are more than $20,000 worth of repairs in order for me to have the right to terminate. So again, there are ways that we can come to a compromise where you’re not waving your protections as a buyer. But we’re giving the seller a little bit more comfort so that they think that we are going to make it to closing.

And of course like that, there are little ways that we can give the sellers other things outside of the inspection and the appraisal. But those are the two biggest contingencies that usually make a seller nervous. Other things we can give the seller is the closing date that they want. If we’re capable of doing that, we’re capable of closing quickly because they want that or they want to rent back. And those are less about making it to closing a more just little incentives, which could be like a whole separate video on its own. 

So if you guys are interested in that blog, please let me know and leave a comment below.